Cyber risks to governance, Part I – Silk Road: resisting and reshaping governance

In an era of Snowden, Wikileaks, Dark Web and data breaches there have never been so many cyber risks associated with governance. This article is the first of a 3-part Strife series which examines three diverse aspects of cyber risks to governance. Andreas Haggman begins by looking at the online Market Place Silk Road and its transformation of the online market place. Next, Yuji Develle and Jackson Webster will examine cyber attribution in policymaking, then Strife Editor Christy Quinn will examine on the implications of hyper-connectivity.

The Internet has had an enormous impact on social interactions. The wide availability of digital communications and constant connectivity means interactions can happen nearly instantaneously between geographically distant locales. Perhaps one of the biggest impacts of this transformation has been in commerce. Through online marketplaces and direct points of sale, goods producers are able to reach customers without going through the traditional distribution and marketing routes involving manufacturers, distributors, wholesalers and retailers. For customers the shopping experience has also been greatly simplified, being able to peruse entire catalogues of products, reading reviews, ordering, paying, and arranging delivery straight to their door, with just a few simple clicks on their computer or smartphone while sitting at home in their bathrobe.

Both producers and customers have embraced this digital transformation with gusto. E-commerce contributed £121 billion to the UK economy in 2010 (8.3% of GDP) and is predicted to amount to some £645 billion worldwide by 2018. Though the attendant benefits are much welcomed, this rapid rise also poses challenges, particularly to regulators and legislators attempting to keep apace with developments. Maintaining oversight and writing laws is traditionally a slow process that struggles to keep up with technological developments – the fallout from the Snowden leaks of 2013 has shown how law- and policy-makers lag behind the intelligence gathering capabilities they are supposed to govern. Because analogue legal constructs often cannot be readily transferred to the digital domain, e-commerce can suffer from a lack of regulation or be anarchically regulated. The overall effect here is that governance in cyberspace is exceedingly difficult.

Opportunistic entrepreneurs have taken advantage of this. Particularly noteworthy is the exploitation of Internet anonymisation services to conduct trade online incognito. The most well-known instance of this was Silk Road, and its successor Silk Road 2.0. Silk Road was an online marketplace operated as a Tor hidden service, enabling users with the right software (a Tor browser) to access the marketplace anonymously. Anonymous purchases were facilitated through utilising cryptocurrencies (Bitcoin) as payment. Bitcoin ensures anonymity by not identifying owners of the currency by name, though some other transactional data is still public. Silk Road was also a part of the Dark Web meaning it was not indexed by search engines like Google. This anonymity and secrecy meant purveyors on Silk Road could peddle wares of highly nefarious natures, especially illicit drugs. The whole spectrum of narcotic substances was readily available, from psychadelics and stimulants to opioids and prescription drugs and everything in between.

Silk Road is emblematic of the challenges governments face in the hyperconnected, digital world and represents the latest attempt of online communities to avoid and subvert external governance. This movement was initiated by the crypto anarchists and cypherpunks of the 1980s. These communities made up of likeminded individuals resist external governance through adoption of technologies which enhance personal privacy and secrecy, for example through public key encryption. Through the use of Tor and Bitcoin, Silk Road resisted traditional means of commerce over which the government exercises control. Legitimate vendors and buyers are regulated by strict laws applicable to whatever particular sector they are in, as stipulated by government.

One reason governments stipulate these laws is to ensure a certain standard is met, but another major factor is taxation. Government revenues come primarily from taxing individuals and companies residing in their jurisdiction, but to do this the only acceptable means of gathering tax is through a controlled currency. Long gone are the days when a King’s levy could be paid by forfeiting a cow or some bushels of grain. By using Bitcoin, Silk Road eschewed traditional ‘hard’ currencies in favour of one which was not recognised, let alone controlled, by government. This exemplifies Silk Road’s resistance to governance, as it refused to play by the rules.

Where Silk Road becomes especially intriguing, however, is in the way it implemented systems of self-governance. Despite being a bazaar for illicit trade, Silk Road laid down a code of ethics which forbade sales of items such as child pornography, weapons, stolen credit cards and assassinations (although these can be found elsewhere on the Dark Web). Such self-regulation must be admired in a situation where Silk Road could easily have facilitated sales of these products, and profited from them, but chose not to because of a strong moral stance. This is perhaps indicative of how governance should be approached in an ungovernable cyberspace. Rather than try to flood the domain with rules which can be bypassed with technological means, it is better to promote basic human standards which underpin how we interact in our everyday lives – both online and offline.

In a similar vein, in order to promote confidence in the marketplace, Silk Road enabled buyers to leave reviews of sellers and their products. This system allowed reliable and reputable vendors to flourish, whilst exposing scammers and low-quality goods. This is comparable to equivalent systems available on Clearnet (public) sites like Amazon and Ebay. Without being able to physically visit a vendor’s store and inspect their products, online buyers are always taking a risk when making a purchase. Good reviews are only gained by conveying good products or services, and the system thereby promotes quality and reliability.

Through these mechanisms, Silk Road demonstrated how governance in a digital society can, and needs, to be reshaped. Traditional means of governance often cannot be readily applied to the online world, which instead requires new ways of thinking about how to implement and enforce rules. Silk Road, and other online marketplaces, are very much bottom-up, consumer-driven communities where power lies with the people rather than the administrators. Perhaps, in some sense, the digital world represents opportunities to exercise democratic principles on a grander scale than have hitherto been achieved.

Special consideration should also be paid to the international facets of Silk Road. Like the Internet itself, Silk Road transcended state boundaries and enabled transnational commercial relationships to form. Though the site’s language was English, the users did not necessarily originate from or reside in English-speaking parts of the world. Here is an obvious link to Silk Road’s ancient eponymous trade route spanning the Asian continent. The original Silk Road not only facilitated the transmission of goods between geographically distant lands, but also helped spread culture and ideas, particularly religion. Though the modern Silk Road never aspired to such non-materialistic deeds, the multinational and multicultural aspects are noteworthy.

The page put up by law enforcement agencies after the seizure of Silk Road 2.0 perhaps reveals the most about the challenges to governance posed by this internationalism (see Figure 1). The flags of 13 different countries are displayed on the page, indicating that each of these states participated in the effort of closing the site down. These countries are spread across two continents, 12 time zones and between them speak 11 languages. In a world where threats and breaches of governance are international in scope, the activities to counter them must assume a similar stance. The biggest challenges to governance in a hyperconnected, digital society are how to cross the geopolitical, physical and linguistic divides which define the persisting Westphalian system of states.

These challenges were overcome by Silk Road because it did not adhere to this anachronistic system. Nation-states, on the other hand, are stuck with the old ways and means of achieving governance, security and power. Without appearing overly radical, it could be suggested that the police forces and militaries which ensure domestic and international world order today are a thing of the past, and their importance and influence will gradually wane as the digital revolution gathers pace. At the present juncture those in power can interpret this as a threat to the states they govern because they fail to impose their desired order by combating the new with the old. In some sense, the survival of the state as we know it requires wide-scale integration of not only digital technologies, but also the norms that accompany them. It is perhaps this which the older generation fails to understand, and therefore fear, but which the younger generation embraces so wholeheartedly.

Despite two iterations of Silk Road being seized and taken down, the infamous Dark Web marketplace lives on – and it will continue to do so. Silk Road itself resists and reshapes governance in the digital domain, but it is also representative of wider issues relating to control and power on the Internet. It is clear that transformative motions are at work and are beginning to make themselves heard and felt. At the moment it appears that those wishing to govern are behind the curve of these transformations; whether that will stay the case remains to be seen.

Andreas Haggman is a PhD researcher in the Cyber Security Centre for Doctoral Training at Royal Holloway University of London. His main research interests lie in non-technical cyber security topics pertaining to military and government applications of cyber technologies, and organisational and policy responses to cyber security issues. He is particularly interested in cyber security strategies, weaponised code proliferation and cyber forces recruitment. You can follow him on Twitter @Andreas_Haggman.